In the consolidation market, the stock market generally operates in a box with a top and a bottom, fluctuating up and down. At this time, it is important to choose individual stocks with similar trends to the market and engage in some short-term operations. The typical form of this type of stock is a rectangle. If in the early stages of the rectangle, it is expected that the stock price will adjust according to the rectangle, then you can buy near the lower boundary of the rectangle and sell near the upper boundary of the rectangle, making short-term inflows and outflows. If the amplitude of the rectangle is large, then this short-term return is also considerable.
Market consolidation often makes investors feel very difficult, and in such situations, they often do not know what to choose. In this situation, the primary task of investors is to determine the basic nature of the market and analyze whether it is a bull market or a bear market.
During a bull market consolidation, the stock index may experience temporary fluctuations and consolidation on the way up. At this time, investors should be aware that the direction of the breakthrough after the bull market consolidation is over will be very optimistic. Therefore, investors can rest assured to choose stocks and actively operate them. Generally speaking, the stock index may come to a standstill due to certain reasons. If the stock index encounters resistance at a temporary high level, faces selling pressure from profit taking, and is not clarified when uncertain factors arise, it will all affect the stock index.
In a bull market, when there is consolidation, investors should follow the following principles when selecting stocks: (1) A stock with a deep pullback. (2) Stocks that have risen against the market trend. (3) The overall stock of a strong platform. (4) A stock that quickly rises and retraces. (5) Stocks with large orders to protect the market.So, how should we respond during a bear market consolidation? In a bear market, it is generally the temporary oscillation and consolidation of the stock index during the decline. Investors should keep in mind that after the consolidation is over, the index will eventually continue to turn downwards, so they should be highly alert to this situation and carefully select stocks.
When there is consolidation in a bear market, investors should follow the following principles when selecting stocks: (1) Stocks with a complete upward channel. (2) The first time encountering a stock with important support levels. (3) The first stock to hit a historic low. (4) Individual stocks experiencing consecutive sharp declines. In this case, it is generally the case that the company's fundamentals have not deteriorated, but rather due to the selling of the main players in the market and the sharp decline of the overall market. At this point, the more intense the decline, the better.In the market consolidation, various individual stocks took turns performing, with some profitable market makers pulling one or two bullish lines to lure the enemy deeper when fleeing, some market makers quickly completing the main uptrend while people were still undecided, and some market makers struggling to support and protect the market while breaking through. In this chaotic situation, it is important to keep a close eye on your wallet and steadily earn money from the market makers. Firstly, you need to identify the nature of the current stock market and the stage it is in, and then speculate on the sustainability of the market to determine the corresponding strategy.
When encountering a sharp decline, the first thing investors need to do is to maintain a clear mind and a calm consciousness, not to be affected by the panic atmosphere generated by the sharp decline, and not to panic at this time. They cannot lose their rationality or be completely emotional in this position. In this stock market, investors first need to be able to distinguish the nature of the sharp decline.
If it is a sharp decline in the overall market, we should focus on the following types of stocks(1) A stock that reacts extremely to a sharp decline in the overall market.
(2) The upward channel is still intact, a unique individual stock.
(3) Stocks with strong market protection.
(4) If the market is in a downward trend, only light stocks can be chosen.
(5) If the market is in an upward trend, it should be heavily invested, held for the long term, or traded in a trading band.
(6) If the market experiences the last sharp drop before hitting bottom, then heavy positions, medium to long term holdings, long-term holdings, or trading bands are recommended.
If it is a stock crash, the following stocks should be selected(1) The stock price plummeted continuously at the bottom.
(2) Due to temporary negative news.
(3) Due to the news of the first loss.
(4) Serious oversold, the larger the magnitude, the better.
(5) After the first surge, there was a rapid decline.
(6) Returning to the old place after the first significant increase in volume.
When the stock market continues to rise, with high sentiment and a strong bullish atmosphere, the prices of good stocks are usually not low, and even the market is severely overvalued, which no longer shows "good". Only in a bearish market, during consecutive sharp declines and at the bottom of the trading band, do people fear that the market will continue to decline and there will be a final drop, so panic buying often occurs at low levels.
Experienced investors usually choose valuable stocks that are severely oversold at this time. Even in a super low price ambush, there are still people who will "kill" your chips. Because at this time, many stocks that were originally "boutique mall prices" will suddenly become "street vendor prices" stocks, and there is also an opportunity to find cheap goods, which is a time to make big money.
However, the prerequisite must be that you can retire successfully when you are at the top of the band and the market is bullish. In this way, we can have enough funds to buy flooring at the bottom and have excellent patience, believing that it will definitely rise in the future.
